QUESTION 1

1. What is the best way to describe Net Present Value?
2. The present value of all payments after taxes.
3. The difference in all incoming cash-flows and outgoing cash-flows.
4. The present value of all incoming cash-flows subtract the present value of all outgoing cash-flows.

1 points

QUESTION 2

1. A company has decided to complete a project that will bring in some money over the next several years. After working out the details, they find the NPV to be less than 0. What would you conclude?

• we cannot make any definitive conclusions.
• This project will have a negative loss. This project is ok to go forward.
• This project will be losing them money.

1 points

QUESTION 3

1. A project has a cost of $10,000 (this is the only outgoing cash-flow) and the NPV works out to be 0. What does this mean?

• It is possible that the PV of all incoming cash-flows is greater than $10,000.
• The PV of all the incoming cash-flows must also equal $10,000.
• We cannot determine the PV of incoming cash-flows.

1 points

QUESTION 4

1. The present value of all outgoing cash-flows is $15,000. The NPV is greater than 0. What do we know about the present value of all the incoming cash-flows?

• The value is > 0.
• The value is 0.
• The value is < 0.

1 points

QUESTION 5

1. NPV is similar to Profit in that it finds the (PV) value of all incoming money subtract all outgoing money.
2. True
3. False